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Pros And Cons Of Foreign Direct Investment In Russia

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Foreign direct investment (FDI) is when an individual or a company in one nation invests in business entities or practices within another nation. Across different nations and sectors, there are multiple restrictions and requirements as to how FDI can be done. Russia is a nation that is fairly open to FDI. They want to encourage foreign companies to produce their goods in Russia, so in many industries FDI restrictions are very reasonable. There are a few exceptions to this point. One such exception is that Russia has significant requirements for FDI in the Strategic sectors of its economy. These strategic sectors specifically target sectors that influence national defense, as required in the Strategic Sectors law passed in 2008. This makes…show more content…
Property tax reduction/exemption Special Economic Zones (26 zones refer to figure below) Russian corporate with no external branches Qualifying activities by industry: • Manufacturing, Technology & Innovation, Tourism & Recreation, Port & Logistics Profit tax rate may be reduced to 2% in manufacturing and port, 0% in remaining categories. Property tax exemptions for 10 years Free custom zones feature here Tech & Innovations have reduced regressive social contributions until Jan 2018 Accelerated depreciation (Manufacturing /Tourism) Vat exemptions for Port and logistics R&D: 150% tax super deduction Eligible R&D activities across industries Expenditure must relate to new products/services, production/service enhancement 150% super tax reduction on qualifying cost (R&D, labor, depreciation, COG) Skolkvo (Russian Silicon Valley) Russian Corporate Entity Eligible R&D in energy, nuclear, space, telecommunication, biomedical and IT. Resulting IP will be commercialized in Russia. Profit tax, property tax and VAT exemptions Cash grants from the government Reduced social contribution ate of 14% limited to $10,700 0% Profit tax rate Universities, medical and educational entities Companies engaged in 70% + agricultural goods only Rate limited to agricultural good revenue 0% profit tax rate 9.3 Based on the analysis in 9.1
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